The U.S. Court of Appeals for the Ninth Circuit recently adopted an expansive definition of the term “automatic telephone dialing system” (“ATDS”) under the Telephone Consumer Protection Act (“TCPA”). In Marks v. Crunch San Diego LLC, the panel held that, in light of ACA Int’l, the U.S. Court of Appeals for the D.C. Circuit’s landmark decision interpreting certain provisions within the TCPA (previously discussed here) and based on the panel’s own review of the TCPA, the statutory definition of an ATDS includes devices that store telephone numbers to be called, whether or not the device has the ability to generate numbers randomly or sequentially. In so holding, the Ninth Circuit splits from a number of other decisions holding that an essential element of an ATDS is the capacity to generate random or sequential numbers.

The TCPA defines ATDS as “equipment which has the capacity–(A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.” In ACA Int’l, in brief, the D.C. Circuit invalidated the Federal Communications Commission (“FCC”)’s interpretation of two key questions raised by the statutory definition of an ATDS, namely “(i) when does a device have the ‘capacity’ to perform the two enumerated functions; and (ii) what precisely are those functions?” In so doing, the D.C. Circuit created uncertainty as to what features or attributes of a dialing system would bring it within the scope of the ATDS definition.

Plaintiff Jordan Marks filed suit against Crunch San Diego LLC (“Crunch”) after he joined the gym and received three text messages over a period of eleven months. Crunch utilized a system called Textmunication. In this system, phone numbers are captured and stored in one of three ways: an operator of the system can manually enter a phone number into the system; a current or potential customer may respond to a marketing campaign with a text; or a customer may provide a phone number by filling out a consent form on a Textmunication client’s website. A client of Textmunication can then design a marketing campaign and Textmunication will automatically send the desired messages to the stored phone numbers at a time scheduled by the client. When Crunch wants to send a text through Textmunication, a Crunch employee logs into the system, selects the recipient phone numbers, generates the content of the message, and selects the date and time for the message to be sent. The messages are then automatically sent at the appointed time.

Prior to the decision in ACA Int’l, the district court held that Textmunication was not an ATDS because it lacked the present or potential capacity “to store or produce telephone numbers to be called, using a random or sequential number generator” and granted summary judgment for Crunch. Marks appealed the decision, and following his appeal, ACA Int’l was decided. The Ninth Circuit then reversed, holding that a system could be an ATDS if it has the capacity to store a list of numbers and call those numbers automatically, even if the system does not have the ability to generate random or sequential lists of numbers. In doing so, the Ninth Circuit first reviewed the statutory definition of ATDS as set forth by Congress in 1991 and determined that the provision is ambiguous, and, accordingly, that it was appropriate to look to the context and structure of the statutory scheme. The Ninth Circuit found that Congress intended to regulate devices that make automatic calls, including those devices that make automatic calls from lists of recipients, rather than utilizing a random or sequential number generator. The Ninth Circuit rejected Crunch’s argument that because the system was not fully automatic, it did not qualify as an ATDS, holding that Congress had been clear that it was targeting equipment that could engage in automatic dialing rather than equipment that operated without any human oversight or contact. The Ninth Circuit remanded the matter back to the district court for further proceedings.

In addition to the Ninth Circuit, several other courts have discussed the effect of ACA Int’l on the definition of ATDS:

In Gonzalez v. Ocwen Loan Servicing, LLC, the Court concluded that a predictive dialer that lacks the capacity to generate random or sequential telephone numbers and dial them, but it does include a predictive dialer that has the “present ability” to do so.

In Washington v. Six Continents Hotels, Inc., the Court agreed that ACA Int’l set aside not only the FCC’s 2015 ruling but also the FCC’s historic treatment of which devices qualify as an ATDS. 16-3719, 2018 WL 4092024, at *3 (C.D. Cal. Aug. 24, 2018) The Court then determined that the complaint adequately alleged the use of an ATDS by claiming that the defendant “acquired Plaintiff’s number, stored it in a database connected to its telephonic or computer system . . . [the system] . . . has the capacity to generate random numbers . . . has the capacity to generate sequential numbers . . . [and] has the capacity to store and dial the random or sequential numbers it generates just like it stored and dialed Plaintiff’s number.” Id.

In Heard v. Nationstar Mortg. LLC, the Court held that a system that could and did store customer information for at least 24 hours and did not have the capacity to store or produce telephone numbers to be called using a random or sequential number generator fell within the definition of ATDS. 16-694, 2018 WL 4028116, at *5-6 & n.2 (N.D. Ala. Aug. 23, 2018).

In King v. Time Warner Cable Inc., the Second Circuit determined that qualification as an ATDS was limited to those devices that were “capable at the time of use” of performing the functions of an autodialer, absent any modifications to the device’s hardware or software. 849 F.3d 473, 476–77 (2d Cir. 2018).

In Dominguez ex rel Himself v. Yahoo, Inc., the Court held that, absent any evidence that the device had the capacity to generate random or sequential telephone numbers and dial those numbers, the plaintiff failed to show that the text messaging system was an ATDS in light of ACA Int’l. 894 F.3d 116, 119 (3d Cir. 2018).

Given the split among courts on how to interpret ATDS, uncertainty will continue to prevail until there is additional clarification, either from the Supreme Court or the FCC. The FCC has requested further comment from the public regarding the interpretation of the TCPA in light of this decision.

In a decision released last week, the District Court for the Northern District of Illinois denied a plaintiff’s motion for an order altering the court’s order dismissing the second amended complaint without prejudice and granting it leave to file an amended complaint. In Telephone Science Corporation v. Asset Recovery Solutions, LLC, the court previously granted defendant Asset Recovery Solutions, LLC’s (“ARS”) Rule 12(b)(6) motion to dismiss the second amended complaint of plaintiff Telephone Science Corporation (“TSC”), with prejudice, for failure to satisfy the “zone-of-interests” test under the Telephone Consumer Protection Act (“TCPA”) (previously discussed here).

On November 18, 2016, the Federal Communications Commission’s Enforcement Bureau (“Bureau”) released an Enforcement Advisory clarifying the TCPA’s limits on the use of autodialed text messages, known as “robotexts.” The Bureau confirmed that its rules restricting the use of automatic telephone dialing systems include those that deliver texts in addition to those that place calls. The Bureau also clarified the applicable rules regarding consent, texts to reassigned wireless numbers, advertising texts, and enforcement.

Consistent with prior FCC guidance, the Bureau confirmed that the TCPA prohibits autodialed text messages, unless made with the prior express consent of the called party, to any telephone number assigned to a cell phone or other mobile device unless the robotexts fall into one of three exceptions: (1) texts made for emergency purposes; (2) texts that are free to the end user and have been exempted by the Commission, subject to conditions prescribed to protect consumer privacy rights; or (3) texts made solely to collect debts “owed to or guaranteed by the United States.” See 47 U.S.C. § 227(b)(1)(A)(iii). The Bureau confirmed that text messages sent through texting apps, “Internet-to-phone” text messaging, and similar technology meet the statutory definition of an autodialer, and therefore fall within these restrictions.

The Southern District of California recently dismissed two Telephone Consumer Protection Act (“TCPA”) 47 U.S.C. § 227 actions for a failure to allege any concrete injury traceable to defendants. In both actions, the court found that plaintiffs had not alleged any concrete harm traceable to defendants’ alleged violation of the TCPA. Due to this, the court held that plaintiffs lacked standing under Spokeo v. Robins, 136 S.Ct. 1540 (2016) (previously discussed here), in which the U.S. Supreme Court held that “a bare procedural violation, divorced from any concrete harm [does not] satisfy the injury-in-fact requirement of Article III.”

On August 4, 2016, the Federal Communications Commission (the Commission) released a Declaratory Ruling clarifying the meaning of the “emergency purpose” exception to the Telephone Consumer Protection Act’s (TCPA) prohibition on certain autodialed or prerecorded-voice calls. The Commission also found that the voluntary provision of cellphone numbers to schools or utilities constituted prior express consent to calls “closely related to” the educational and utility services offered by the callers.

The Third Circuit recently applied the FCC’s new interpretation of “automated telephone dialing system” under the Telephone Consumer Protection Act (“TCPA”), which the Commission adopted this past summer in its highly controversial Telephone Consumer Protection Act declaratory ruling. The court in Dominguez v. Yahoo, Inc. vacated and remanded for further proceedings the district court’s order on summary judgment for Yahoo.

According to the Third Circuit, under the FCC’s newly-formulated definition, a system is an autodialer, and, in general, subject to the TCPA’s prohibition on autodialed calls to wireless numbers absent consent of the called party, if it is “able to store or produce numbers that themselves are randomly or sequentially generated ‘even if [the autodialer is] not presently used for that purpose.’” In adopting this definition and following the FCC, the Third Circuit focused on the “capacity” element that was at the crux of the FCC’s decision.

On Friday, July 10, 2015, the Federal Communications Commission issued its much-anticipated Declaratory Ruling and Order clarifying numerous aspects of the Telephone Consumer Protection Act. The commission had adopted the order at a particularly contentious June 18, 2015 open meeting (see earlier post), which one commissioner called “a farce” and another described as “a new low … never seen in politics or policymaking.”

In an unusual move, the commission made the order effective on its July 10 release date, rather than following publication in the Federal Register as is typical, providing companies with no opportunity to digest the order and adjust business practices accordingly.

As expected, the order largely brushes aside legitimate business concerns and a sensible approach to TCPA regulation in favor of findings that potentially increase risk for businesses in a variety of circumstances, including the possibility of increased class action litigation. In addition, beyond clarifying that carriers may offer call-blocking technologies to consumers, the order offers little to actually protect consumers from scam telemarketing schemes, including offshore “tele-spammers” that use robocalling or phone-number spoofing technologies.Read More

At its June 18, 2015, open meeting, a sharply divided Federal Communications Commission made good on Chairman Tom Wheeler’s recent promise to bolster the Telephone Consumer Protection Act’s already strict rules and to bring about “one of the most significant FCC consumer protection actions since it established the Do-Not-Call Registry with the FTC in 2003.” While plaintiffs’ class action lawyers are likely to applaud the new measures, businesses are concerned that the new rules could unfairly restrict legitimate communications with customers.

Congress enacted the TCPA in 1991 to address what it perceived as the growing problem of unsolicited telemarketing with technologies such as fax machines, pre-recorded voice messages and automatic dialing systems. The TCPA requires anyone making a call to a wireless line using autodialer or pre-recorded voice-call technologies to obtain the “called party’s” “prior express consent,” and, following a 2012 FCC decision, “prior express written consent” for calls that introduce advertising or constitute telemarketing. Similarly, under that ruling, calls to residential lines using an artificial/pre-recorded voice that introduce advertising or constitute telemarketing require the called party’s prior express written consent. Read More

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